Amazon shares soar as earnings beat expectations

Posted - October 28 201701:10

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Amazon shares soar as earnings beat expectations

This figure includes $1.4bn from the recently-acquired Whole Foods Market, where Amazon has slashed several prices in an effort to undercut rivals and expand its presence in the physical grocery space. Excluding Whole Foods Market and the 124 million dollars favourable impact from year-over-year changes in foreign exchange rates, net sales increased 29 percent. Q3 net income was $256 million or 52 cents per diluted share, which was roughly flat compared to the year-ago period but demolished the 3 cents-per-share Thomson Reuters I/B/E/S analyst expectation cited by Reuters. Third quarter operating income includes a $21 million contribution from Whole Foods Market.

Amazon who are now tipping millions moving into new markets including Australia, has seen their shares rise 7% after reporting a 35% lift in United States revenues and a 29% lift in global sales.

Amazon's third-quarter revenue increased 34% year over year. Management had guided for third-quarter operating income to be between a loss of $400 million and a gain of $300 million.

Its cloud computing arm Amazon Web Services accounted for $4.6 billion in revenue and $1.2 billion in operating income. The move is interesting, as I am sure there are not many people with Amazon Echo products who do not also have Prime. Amazon had almost 542,000 employees at the end of last month, about 160,000 more than it had the year before.

The Amazon Web Services or AWS, which handle computing and data for large companies, saw growth in profit margin compared to the quarter before, posting a rise in sales of nearly 42% to end at $4.57 billion, which beat estimates of $4.52 billion.

Amazon's Alexa-enabled devices remain a hit with customers.

Founder and CEO Jeff Bezos touted the popularity of its devices and pointed out that it launched five new voice-activated devices in the last month.

In its release, Amazon vowed to continue the downward pressure on prices at often-pricey Whole Foods, saying "the two companies together will pursue the vision of making high-quality, natural and organic food affordable to everyone".

Amazon's other huge announcement this quarter, the plan to build a second North American headquarters, will bring another 50,000 jobs to the winning bidder.

Neil Saunders, managing director of GlobalData Retail, says it's still too early to say whether the Whole Foods acquisition is a success story.

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen.

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